Rogers Communications (TSX:RCI.B) has long been a key player in Canada’s telecommunications industry, providing millions of Canadians with wireless, internet, and media services. But with Rogers stock now trading under $40 per share at writing and significantly down from its 52-week high of $62.05, investors are asking, “Is it time to back up the truck and load up on shares?”
The numbers
Rogers stock’s recent earnings provide a mixed picture. In the fourth quarter of 2024, Rogers reported earnings per share (EPS) of $1.46, beating analysts’ expectations of $1.36. This was a strong improvement from the $1.19 EPS in the same quarter a year ago. Net income also jumped to $558 million, up from $328 million the previous year. However, subscriber growth was weaker than expected. Rogers added 69,000 new wireless subscribers on monthly plans, slightly missing estimates of 72,380. This shortfall reflects competitive pressures and a slowdown in immigration, which has historically helped drive growth in the industry.
Rogers stock has been on a downward trajectory for much of the past year, reflecting investor concerns about slowing growth and rising competition. The stock has fallen approximately 35% from its peak, making it one of the more battered names in the telecom sector. For long-term investors, however, this decline could represent a buying opportunity. Rogers remains one of the dominant players in Canadian telecom, with a strong market position and valuable assets.
What to watch
Looking ahead, Rogers stock is optimistic about its future. The company has guided for single-digit growth in service revenue, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), and free cash flow in 2025, driven by continued investments in 5G and network infrastructure. The company plans to allocate roughly $4 billion in capital expenditures to improve its wireless and fibre networks — an effort that could strengthen its competitive position in the long run. With the demand for high-speed connectivity rising, Rogers stock appears well-positioned to benefit from these structural tailwinds.
Rogers’s media segment has also performed well, with revenue in this division rising 11% in the third quarter of 2024, largely due to strong performance in its sports-related assets. The company owns the Toronto Blue Jays and holds a major stake in Maple Leaf Sports & Entertainment. These provide a diversified stream of media revenue that bolsters its financial position. With the sports broadcasting business remaining resilient, this part of Rogers’s portfolio adds stability to its earnings base.
Immediate hurdles
Challenges remain, however. The Canadian telecom market is fiercely competitive, with rivals aggressively pricing their services to attract and retain customers. This dynamic has pressured Rogers’s ability to grow its subscriber base and maintain pricing power. Additionally, broader economic factors such as interest rates and immigration policies could have an impact on consumer spending and industry growth. High debt levels are another concern, with Rogers stock carrying approximately $45.9 billion in debt, translating to a debt-to-equity ratio of over 400%. While the company generates strong cash flow, it will need to manage its debt load carefully.
Yet for dividend investors, Rogers stock remains a compelling option. The stock currently offers a dividend yield of around 4.9%, with a payout ratio of 70.7%. This suggests that the company’s dividend remains well covered, though any prolonged financial struggles could put future increases in doubt. Historically, Rogers has been a reliable dividend payer, making it attractive to income-focused investors looking for stability.
Bottom line
Despite near-term challenges, Rogers stock’s long-term growth prospects remain intact. With its heavy investments in 5G, strategic acquisitions, and diversified business model, the company is positioning itself for continued success. The current weakness in the stock may be a temporary setback rather than a fundamental decline. And investors with a long-term perspective might find this to be a good entry point.
While risks remain, Rogers stock’s strong market position, improving financial performance, and solid dividend make it a stock worth considering. Investors looking for a beaten-down blue-chip telecom stock with strong long-term potential may find Rogers Communications an attractive addition to their portfolio.
